Participants in an alleged tax-fraud scheme working in Quebec’s gold-processing sector are facing $750 million in fines and up to five years behind bars following a Revenue Quebec investigation.

The agency was tipped off to the scheme through investigators’ usual activities, and in June 2011 launched Project Carat to look into events that took place between March 2008 and August 2010.

Companies and people accused in gold tax scam:

Kitco Metals
Bart Kitner

Ardor Jewellery Ltd.
Yegya Batri

Bijouterie La Dolce Inc.
Rafi Agopian

Bijouterie Marlena’s
Viken Fernezlian

Goldiva Inc.
Sarkis Garboyan

Hovans
Ohannes Tchouldjan

Bijoux Vama
Vahe Kertechian

Bijouterie Assad'Or
Aghop Assadourian

Bijouterie Gorgeous
Khatchik Garabet Guebenlian

Kev Diamonds
Keyork Hamammejian

Bijouterie Arzouni
Mirna Arzouni
Amer El-Jouni

Bijouterie de Bruxelles inc.
Varoujan Jozikian
Shadia Khatib

Revenue Quebec spokesman Stéphane Dion said Montreal-based refiner and retailer Kitco Metals, as well as 11 corporations and their directors, are facing a combined 1,920 charges for allegedly engaging in what Dion described as “false business activities involving the use of fake invoices, in order to claim illegal [tax] refunds.”

How Revenue Quebec says it happened

Dion said those accused of engaging in the scheme wrongfully avoided paying provincial and federal sales taxes on sales of gold.

Dion explained that pure gold is non-taxable, though gold jewelry and other products are. He said gold wholesalers would sell gold bars to retailers, who would then transform the bars into jewelry, then collect the applicable tax credits.

He said the retailers would then sell the jewelry back to the wholesaler, who would transform the gold back into bars.

Kitco denied Revenue Quebec’s charges in a news release issued after the details of its investigation were released. The company and its president, Bart Kitner, denied Kitco’s involvement in the tax-fraud scheme, calling Revenue Quebec’s investigation “an abuse of their authority.”

“Among Kitco’s lines of business is the purchase of scrap precious metals. Kitco pays the companies’ sales taxes on these purchases and receives tax credits for the corresponding amounts,” the news release says. “It is then the companies’ responsibility to remit these taxes to [Revenue Quebec].”

Dion said Revenue Quebec is seeking maximum jail terms for the directors of the companies it alleges were involved in the tax-fraud scheme.